Pennsylvania Audit Questions Charter School Lease Reimbursements

Pennsylvania Auditor General Eugene DePasquale has said that the $2.5 million collected by nine charter schools as reimbursement from the state was “questionable” and needs to be paid back.

The issue came up during an audit released earlier in the week detailing the Propel Charter School System in Allegheny County. However, DePasquale noted that similar issues have come up in almost one-third of the 40 charter school audits performed by his office since he took the position in 2013.

“What we found in some of our audits the same people who own and operate charter schools create separate legal entities to own the buildings and lease them to their charter schools,” DePasquale said. “We keep finding it and supplying the information to the department and they do nothing with it.”

A review of the auditor general’s report is underway with plans to continue a discussion with stakeholders on the matter. However, Education Department spokeswoman Casey Smith has confirmed the idea that charter schools may not request reimbursement on buildings they own. She added that charter school CEOs “are required to sign a self-certification statement verifying that the charter school does not own the building and that the building is being used for educational purposes.”

At the same time, Alan Shuckrow, a lawyer for Propel, supports the lease reimbursement payments made to the school, arguing that no conflict of interest exists between the charitable organization that owns the building and Propel schools.

“From Propel’s perspective, we’re following the law and if the law changes, we’ll comply with that law,” Shuckrow said. “I think it’s more of a public policy issue with charter schools that the auditor general raises and how this could or should work from a policy standpoint.”

DePasquale is also questioning a number of lease reimbursements made to other charter schools in the state, totaling $2.5 million all together. Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, suggests the conflict stems from different interpretations of the state guidelines. While DePasquale did acknowledge that it was not the fault of the charter schools to have applied for reimbursement, he said that the department should not have made the payments, adding that the money could have been put to better use.

He went on to say that the charter school law currently in effect in the state is one of the worst in the nation and is in need of reform. While a reform was pushed by lawmakers during a last-minute rush to finish the 2016-17 state budget, it failed to go through.

Meanwhile, a new Division of Charter Schools is currently being created within the department. The division will be in charge of monitoring and offering support to all areas of charter school performance, such as investigations, on-site monitoring visits, and other technical assistance.